The world could face years of jobless economic recovery, with young people set to be hit the hardest as global unemployment continues to rise this year, the International Labour Organization (ILO) has said in a new report.
As the World Economic Forum kicks off in the Swiss town of Davos today with a focus on rising inequality, the ILO has highlighted a “potentially dangerous gap between profits and people.”
The UN agency forecasts millions more people will join the ranks of the unemployed as companies choose to increase payouts to shareholders rather than invest their burgeoning profits in new workers.
The ILO’s “Global Employment Trends” report forecasts that world unemployment will rise to 6.1 percent this year from 6 percent last year and will remain well above its pre-financial crisis rate of 5.5 percent for several years.
It puts the youth unemployment rate at 13.1 percent, more than double that for the whole workforce and almost three times the adult rate of 4.6 percent — putting the ratio of youth to adult unemployment at an all-time high.
ILO director-general Guy Ryder also highlighted rising inequality as wages fail to pick up, long-term unemployment problems intensify and progress stalls on cutting working poverty.
“Corporate profits are up and global equity markets are looking forward to another year of plenty, while at the same time unemployment and household incomes stand still,” Ryder said. “The modest economic recovery has not translated into an improvement in the labor market in most countries. Businesses have been sitting on cash or buying back their own stocks, rather than investing in productive capacity and job creation.”
His comments follow a report by Oxfam that the world’s richest 85 people control as much wealth as the poorest half of the global population put together. Released on the eve of the Davos meeting of political and business big-hitters, the charity’s report found the world’s richest 85 share a combined wealth of US$1.64 trillion, as much as the poorest 3.5 billion.
The ILO said 5 million more people became unemployed last year taking the global total to 202 million. That is forecast to rise to 215 million jobseekers by 2018 as employment growth, at 40 million net new jobs a year, fails to keep pace with the 42.6 million people expected to enter the labor market every year.
Young people will continue to be particularly affected by what the ILO describes as a “weak and uneven recovery.”
The proportion of young people not in employment, education or training (NEETs) continues to rise. Some of the worst rates are in those countries hit by the eurozone crisis. In Spain and Ireland more than one in five young people are NEETs.
The ILO also painted a gloomy outlook for the long-term unemployed.
“The average length of unemployment spells has increased considerably, a further sign of feeble job creation,” the report said. “In many advanced economies, the duration of unemployment has doubled in comparison with the pre-[financial] crisis situation.”
The average duration of unemployment has hit nine months in Greece and eight months in Spain.